Airline Ticket Tax Tabled in Budget Negotiations

THE HAGUE, 03/10/13 - To accede to the wishes of the opposition parties, the cabinet is prepared to change the budget for 2014 substantially. A flying tax may be introduced, sources in The Hague report.

The cabinet can agree to a halving of the proposed freezing of tax brackets. By not or only partially allowing the brackets to rise with inflation, taxpayers land up more quickly in a higher bracket and thus pay more tax.

Additionally, the coalition is prepared to extend the temporary reduction in the VAT rate for building and renovation until March 2014. At the same time, part of the planned excise duties hikes will be dropped.

The cabinet is also to invest an extra 500 million euros in education, a particular wish of centre-left D66 . Another offer is more to meet a wish of small Christian party ChristenUnie, which wants 40 million euros extra for Defence.

Finally, the cabinet is prepared to discuss the winding down and abolition of the general discount for higher incomes. The last-named is an income-levelling measure that is a particular thorn in the flesh for the Christian democrats (CDA), but also to a lesser extent for D66 and the smallest Christian party SGP.

In order to be able to finance all of this, the cabinet wants to introduce a levy on airline tickets among other measures. The leftwing Greens (GroenLinks) are particular advocates of this. The Netherlands has already had such a tax a few years ago; it led at the time to an exodus of passengers to neighbouring countries, after which the tax was abolished.

Finance Minister Jeroen Dijsselbloem and the financial specialists of the conservatives (VVD) and Labour (PvdA) have been in talks with the financial spokespeople of CDA, D66, ChristenUnie, GroenLinks, SGP and 50Plus since Monday. The cabinet, which only has a majority in the Lower House, hopes to achieve support for its budget for 2014, so that the plans do not get blocked in the Upper House.

On Wednesday, the talks were no longer joint, as on Monday and Tuesday, but bilateral, per party, with the cabinet. The cabinet is still sticking to its plan to achieve savings of at least 6 billion euros next year. This is in line with the demands of the European Commission.